Report 2000
Notable events of the 2000 financial year
Message from the Chairman of the Board of Directors
Message from the President and Chief Executive Officer
Financial report 2000
Notable events of the 2000 financial year
Continued liberalization of the Belgian telecommunications market and the intensification of competition (notably with the launching of a third mobile telephone network and numerous new fixed-telephony operators).
Highlights of the financial year 2000
- The continued liberalization of the Belgian telecommunications market and increased competition: notably with the introduction of number portability and the opening of CPS (Carrier Pre-select) to local calls.
- Better competitive position thanks to an innovative pricing policy more attuned to the market's expectations.
- Implementation on October 1 of a new rate structure.
- Launch of programs containing new, reduced rates for international calls.
- Improved quality and speed of customer service
- Introduction of a range of new products and services, such as ADSL technology, the development of IP VPN services in cooperation with Cisco Systems and the launch of new value-added services.
- Possibility for customers to make purchases or consult bills online.
- Online introduction, in cooperation with Oracle Corporation, of the first electronic business to business marketplace, under the name "3bTrade."
- Centralization of all of Belgacom's logistics in a single distribution center in Nivelles, serving some 650 delivery points.
- Complete digitization of Belgacom's network, which went from 82.5% digital in 1998 to 100% in 2000.
- Continued expansion via strategic sources of growth
- Continued spectacular growth in mobile telephone activities. Belgacom subsidiary Proximus went from 2,067,000 customers at the end of 1999 to 3,277,000 at the end of 2000, an increase of 59%. Major progress also at our Ben subsidiary in the Netherlands. Created in the course of 1999, Ben had more than 750,000 customers at the end of 2000.
- Acquisition by German operator Deutsche Telekom of 50% - 1 share in our mobile telephone network in the Dutch market (Ben) and acquisition by Ben of a 3rd generation mobile telephony license (UMTS) in the Netherlands.
- Merger of the Internet activities of Belgacom Skynet and Infosources in France. Belgacom holds a 74.3% stake in the new company, which will keep the name Infosources and is listed on the Paris Bourse's Nouveau Marché. At the end of 2000, Infosources had 1,610,000 connections (paying and free-of-charge) via its Skynet, Infonie, Swing and Lokace portals.
- New increase (53%) in revenue generated by "carrier" activities (sale of network capacity to other operators).
- Creation of new POPs (points de presence) in Portugal, Italy and Asia in order to better serve international customers.
- Preparation of Belgacom's entry into the e-business world.
Launch of the BeST program, whose goal is to transform Belgacom into a true e-business in its dealings with customers, suppliers and employees.
- Continued preparation for the arrival of the euro.
As of 31 December 2000, all deadlines fixed in 1998 had been met. Belgacom confirmed that beginning in October 2001, all of its transactions with customers would take place in euro.
Message from the Chairman of the Board of Directors
Better and better
Dear reader,
2000 was a successful and eventful year for Belgacom. The major objectives that the company set for itself were achieved, including double-digit growth in both turnover and the Group’s net profit. The Board of Directors is pleased to congratulate Belgacom’s employees and management. The success they have achieved in 2000 continues the positive trend begun five years ago. The weak results posted by most other major operators in Europe are just one more proof of the quality of Belgacom’s teams.
As pleased as we are with this success, the Board of Directors is above all satisfied to see that Belgacom’s employees are determined not to "rest on their laurels." Throughout 2000, our employees have demonstrated a willingness to adapt and a desire to continuously improve. The BOOST program adapted our structures to make them more in line with our customers’ needs. Now, the BeST program (Belgacom e-Business Strategic Transformation), launched during the last quarter of the year, will put Belgacom in the vanguard of the e-business revolution. Indeed, this attitude and the determination to do "better and better" will be indispensable for the Group’s future development.
As Chairman of the Board of Directors, I would also like to salute the constructive spirit of cooperation that characterized the Board’s work during 2000. Faced with challenges and sometimes difficult choices, the shareholders’ representatives have at all times demonstrated a coherent and positive strategic vision. Moreover, cooperation and dialog with the management team have always been flexible and direct. This united approach is essential for any company to function smoothly.
In the area of Corporate Governance, I would also like to cite the activities of two important committees that report to the Board of Directors, the Remuneration Committee and the Audit Committee. The former is responsible for determining the company’s remuneration policy. In 2000, the Remuneration Committee focused on ensuring that Belgacom was fully competitive in this area and that it remains a magnet for talent in Belgium.
The Audit Committee plays an essential role in our organization. In 2000, the Committee concentrated on the proper functioning of the Internal Audit department and its cooperation with external auditors. It also carefully supervised the implementation of recommendations made by internal and external auditors.
The Pension Fund made significant progress in 2000. The Fund manages assets to cover pension payments to statutory employees. In 2000, it was given an additional 12 billion BEF over the normal contribution, one of the factors explaining the decrease in the Group’s consolidated operating profit from 36.8 billion BEF in 1999 to 22.6 billion BEF in 2000. The total amount paid to the Fund in 2000 was 27 billion BEF, which will make it possible to reduce the weight of contributions in the years to come.
This "mission accomplished" makes the Board confident about the future and the significant challenges in store. Competition will continue to increase, and new technologies will appear. Mobile telephony and data transmission will continue their rapid development, and e-business will transform how we work and sell.
Belgacom’s success over the last five years is the result of the ability of management and employees, in cooperation with the unions, to constantly adapt to market developments and, above all, to anticipate change. Growth in 2001 and the years to follow will also depend on this capacity for change. In this regard, the Board wishes to emphasize the importance of controlling and reducing costs to ensure that the Group’s results continue to improve.
We on the Board are convinced that the team spirit that animates the entire company will ensure this objective is achieved in 2001. We are also convinced that in 2001 the Belgacom Group will prove that it is always capable of doing things better!
Michel Dussenne
Chairman of the Board of Directors
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Message from the President and Chief Executive Officer
Better living through telecommunications
Better living! It’s more than just a slogan. It’s a philosophy.
And even more than a philosophy, it’s a promise. Belgacom is committed to meeting the challenges of the information age.
We are currently at a turning point, full of intensity and things unforeseen. And the watchword for this era is Internet. Whether consciously or intuitively, regardless of whether we are politicians or entrepreneurs, professors or students or ordinary citizens, none of us can fail to recognize that the Internet is revolutionizing our society.
This revolution will be every bit as far-reaching as past inventions such as the printing press, steam engine and electricity. As did these inventions, the Internet will radically change the way we live. More than simply changing how we communicate, it will transform how we live and relate to one another.
Telecommunications is at the heart of this revolution: Belgacom must therefore find answers to the everyday needs and expectations of individuals as well as companies.
If concepts such as "e-learning," "e-business" and "e-working" are to be more than just the jargon of a technological elite, if they are to become truly meaningful, they have to improve people’s lives.
Better quality of life is what all of us want, and that is what this year’s annual report is all about. The works of Belgian artist and photographer Jean-Dominique Burton that illustrate its pages reflect the numerous ways in which telecommunications can make our lives better.
To make a real contribution to society, Belgacom must meet its business objectives.
At the beginning of 2000, Belgacom established three major objectives: continuous growth, prices that continue to decrease and constantly improving services.
And we kept those promises! We achieved all our objectives thanks to the efforts of the Group’s 22,700 employees, and I would like to express my gratitude to each and every one of them.
The numbers speak for themselves:
- Consolidated results showed significant progress, increasing by more than 10%. This growth and the Group’s excellent overall financial health, as reflected by the AA/Aa3 rating, make Belgacom a standout in today’s telecommunications world. These results will also form the basis of our future development.
- The Group’s consolidated turnover amounted to 207.4 billion BEF (5.1 billion EUR), an 11.6% increase compared to 185.8 billion BEF (4.6 billion EUR) in 1999.
- Net profit (Group share) for 2000 amounted to 19.3 billion BEF (479 million EUR), a 10% increase compared to 1999.
- The year 2000 was also marked by significant rate reductions. In September, a new rate structure was announced, resulting in savings of more than 8 billion BEF for 5 million of our customers.
- Major improvements were also achieved in customer service, an area of crucial importance for all companies. This was largely due to the MACS project (Maximizing Customer Satisfaction), which was launched at the beginning of the year and enabled us to strengthen areas requiring improvement.
In 2001, Belgacom’s employees will also be motivated by the conviction that we can always do better:
- Ever lower prices. Since 1991, prices have dropped more than fourfold. These efforts must continue.
- Continuous service improvement. In 2000, significant improvements were made in terms of customer satisfaction. But we can do even better.
- Internet for a broader public. Thanks to ADSL technology, Belgian Internet users can enjoy high-speed access for a flat rate. By the end of 2000, more than 40,000 customers had signed up for ADSL. By the end of 2001, we want that figure to reach 200,000.
- The transformation to e-business. The BeST project (Belgacom e-Business Strategic Transformation) will enable our company to make most of our contacts with suppliers, customers and Belgacom employees via the Web. This represents a real revolution, which will open up new opportunities for dialog. We will also have to give serious thought to the skills that will be required of our employees. In cooperation with the trade unions, we will be giving this issue our utmost attention.
There is no doubt in my mind that Belgacom will meet these challenges successfully. What has made Belgacom such a strong company? The continuous growth of the last five years. Positive results. Excellent financial health. And above all the winning attitude and values that our employees demonstrate everyday.
John J. Goossens
President and CEO
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